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powayseller
Participantcarlislematthew, calculated risk (bubble blogger link)has been keeping us updated. The state lending guidelines were released a week ago, and now each state has to adopt and issue them. 9 states did so in the first week, but CA is not yet on the list.
As far as shopping, there seems to be 2 year lag between falling house prices and reduced consumer spending. See Chart 21 on Gary Shilling’s excellent piece (thanks to some folks at the meetup for telling me about Shilling). Spending slowdown already started in big ticket items, like houses, cars, furniture, and home improvement companies (contractors, Home Depot). It will ripple out. The biggest lesson to me is how slowly this all moves.
ParticipantGreat evening! Hopefully we’ll meet more at the next meet-up. I should have made a toast to Rich for starting this website, and being the pioneer in exposing the housing bubble. I’m really mad at myself that I didn’t think of it until after I left. So here’s a belated toast to you, Rich.
Participantvegas renter, this thread was started in the off-topics forum. If you enter the forums via “user forums” on the left, you’ll see the topic you’re in, but not when you select the forum topic from the main page.
ParticipantPD, I am dying to meet you, so I’m disappointed I’ll have to wait…
ParticipantYardeni’s points are noted, but they are all fluff points. First, employment lags economic growth by 1-3 quarters. It is a lagging indicator. Second, the quality of jobs is changing from higher paying manufacturing with benefits (pension and health insurance) to lower paying retail without benefits. Third, the phone survey used to measure employment is not the most accurate way to measure employment, since a 20-hr-week daycare worker is counted as employed. Perhaps 20 years ago, she would have had a full-time job for a manufacturer, but now all she can do is part time daycare.
Homes dropping in value are a big deal, especially for the people relying on MEW to sustain their spending, for those who are trying to sell but are underwater, and for those counting on rising home equity to fund their retirement. He forgot to mention ARM resets, and that exotic loans are used nationwide. Even WY had 25% ARMs last year.
Maybe the guy who paid $800K is ahead if the $2 mil house drops to $1.5 mil, but what if the guy paid $2 mil? Then what? What about all the people who bought in the last 2 years who lost all their equity? What about all the ARM resets, and the upcoming short sales?
He’s wrong about Americans. They are not stupid, but they are irresponsible with finances and don’t plan for tomorrow. So we’ll have an entire generation of baby boomers in poverty at retirement. We’ve got people getting ARMs at a time of historically low interest rates. Actually, that is stupid, when you get a 2.9% ARM instead of a 30 year fixed at 4.9%.
Too bad the interview was a conversation instead of a real inverview. Yardeni sure has some explaining to do.
ParticipantFashion Valley is always packed. I don’t get it….I think most of the parking is for the restaurants. Pottery Barn and Restoration Hardware are usually empty. The busiest stores are Victoria’s Secret and the Apple store and Nordstrom’s. Housing, auto sales, home improvement/furnishing retailers are feeling the slowdown, but other retailers are still doing well. Could it be that people are out of money for the $40K bathroom remodel, but not for the $95 shoes? So the less costly retail items are still selling. That’s been my conclusion so far. What do you think?
I also noticed that the lending guidelines are not yet enacted, so MEW is still going strong.
ParticipantAccording to Dataquick’s chart, the price change from the 88-91 high to the 91-97 low, based on resale price/square foot was -10.3% for Poway, Lakeside, Santee, and over -30% for Ocean Beach and Point Loma. How do we explain Dataquick’s numbers? They are not median (which is skewed by sales of bigger homes), but median price/sq ft.
ParticipantPD, I believe in sex, drugs, and rock’n roll. Hey, are you coming to the meet-up tonight?
Participantlindi, it sounds like the foreclosures now are due to the natural rate of foreclosures that occur anyway. We still haven’t hit the ARM reset foreclosures in a meaningful way? I think by the end of next year, your BIL will see the ARM resets increasing his business.
Most foreclosures result from job loss, divorce, illness, or addiction, and there is a nornal rate of foreclosure in any market. Due to the boom, the foreclosure rate was unusually low, as anyone with a problem could easily sell. Now we are getting back to more normal levels.
The next step, and where I expect to see a big jump, is when ARMs reset at the same time that prices are dropping.
ParticipantI read some other archived Dataquick articles today, and saw Ocean Beach median fell 30%, while Poway’s median only fell 10%. Lowest price drops were in Lakeside, Santee, Chula Vista South.
ParticipantThe consumption madness and overindulgence of kids is just absurd. Indulding kids in expensive toys is preparing them for a life of handouts from mom and dad, or the credit card trap.
ParticipantThanks for the link, PC.
ParticipantI thought rents are going up.
ParticipantThanks for the link. I’d wondered if it was available. Yardeni was not convincing. He didn’t have any numbers, and relied on his opinions.
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